FHTA Tourism Talanoa: Fair Wages, Fair Productivity

Fiji Hotel and Tourism Association, 1 August 2024 – The tourism industry has always maintained that our staff is our greatest resource in the sector.

Captured succinctly in Fiji’s recently launched National Sustainable Framework (NSTF) under the goal for a Prosperous Visitor Economy; tourism is recognised as a key driver to support this goal through its ability to drive a prosperous and resilient economy.

Having our people on the front line of delivering this goal means that tourism operators across all segments including our vast supply chains have adapted quickly to the changing demand for skilled workers – heightened by the dwindling supply of these in the aftermath of lucrative overseas job offers, that ensures higher wages, improved retention policies and ramped up training modules have become a normal progression since reopening post-COVID.

This has come at higher costs, and some reimagining of HR processes has given the industry its usual faster reaction of addressing a challenge as quickly as possible.

An entire industry’s future is at stake if we cannot train staff faster or retain skilled staff better.

Increased wages is only one of several methods already in place, so the recent move by Government to announce an increase in the National Minimum Wage as part of the 2024-2025 National Budget announcement, might not have come as any surprise given strong hints leading up to the announcement.

It has been said that the new wage policy was one way of addressing income disparity and ensuring that the wage structure can more effectively align with the cost of living and economic conditions.

Starting from August 1, 2024, the national minimum wage will rise to $4.50 per hour, marking a significant step towards improving income standards nationwide. However, the implementation is pending the formal approval of this through the required process of a Gazette notice amongst other requirements.

This initial adjustment will be followed by a further increase to $5.00 per hour, which will take effect on April 1, 2025.

This gradual implementation is designed to ease the transition for businesses and allow them time to adjust their payrolls accordingly once formally gazetted, along with what is hoped will be some clear guidelines provided by the Ministry of Employment to assist employers across the country to properly implement the increase.

Because it is not an across-the-board increase of 50c on all wage rates as many people believe, but an adjustment to the minimum wage only, in each of the sectoral wages and not if they already are above the new minimum wage rate.

Guidelines could assist in this change being implemented correctly.

The vast majority of employers understand the challenges with accessing skilled staff and have done, or are still doing their best to access the skilled workforce they need.

And while unscrupulous employers will always exist in every country, the agency tasked with addressing this is the Ministry of Employment who are ably armed with the legislative ability to enforce the requirements of fair wages for fair work.

What would be deemed terribly unfair is when compliant employers are lumped in with unscrupulous employers and forced to comply with newly applied restrictions that limit management’s prerogative to manage their business – to turn a profit, to enhance productivity and to provide fair wages and supportive staff benefits that in turn supports their ability to retain staff and have a competitive brand.

But what of productivity?

Well, what of it? As the ministry is also responsible for productivity, employers Fiji-wide await discussions on how we can tie productivity to all of the areas just discussed.

There are other spillovers of higher wages as larger economies have shown, that should also be considered as we take this path.

The ability to pay $30-$40 an hour means that the business must be able to ensure it can make sufficient revenue to cover its higher operational overheads – sufficient to turn a profit as well, otherwise what is the point of it being in business in the first place?

So if it was making bread, how much would it have to charge for a loaf of bread? And if it was growing potatoes or rice, how much would it have to charge for a bag?

If we apply this to the local context and your bread maker was being paid $20 an hour, how much would our long loaf bread then cost us? And would we be willing to consider paying more than a dollar for it?

Are we ready to start paying $5 for a loaf of bread eventually?

It is often noted that higher wages also serve as a powerful stimulus for the local economy and that when workers receive increased pay, they have more disposable income to spend.

This surge in purchasing power is supposed to translate into greater consumer spending, which benefits local businesses and drives economic activity; but we contend that any increased costs to business ultimately drive up the cost to consumers.

But that will only happen if we also adjust our expectations on the direct impact on the cost of business.

Historically, wages in Fiji’s tourism sector have consistently exceeded the national minimum wage.

Along with a higher demand for rooms, the increased cost of labour, imported products, imported fresh produce and fuel have all driven tourism costs up as well, with many local visitors flinching at the high cost of a room night, especially during the high season that is currently running.

This is simply an example of that flow-on effect of a higher cost of business.

A further testament to the industry’s dedication to maintaining high standards of employment and ensuring that its workforce is highly trained and adequately compensated.

By setting higher wage benchmarks, it has consistently demonstrated its commitment to the staff it so critically needs, while playing a pivotal role in shaping broader wage standards across the country.

This progressive approach has helped to attract a skilled and dedicated workforce, contributing significantly to the sector’s growth and the overall quality of service provided to visitors.

Competitive wages are crucial for attracting and retaining talent in the tourism industry – not just for attracting the best staff locally, but internationally as well. A trend that has recently spiked to proportions never seen before.

In an increasingly competitive global market, the ability to offer above-average salaries is a key factor in drawing skilled professionals who can enhance the visitor experience and contribute to the industry’s continued success.

Higher wages provide employees with greater financial security and job satisfaction, with the hope that this will translate to higher productivity, better value and improved service quality.

We recognize that the adjustment to new wage rates requires careful planning and potentially significant financial reallocation as this affects not just the industry but impacts all of our suppliers.

We are therefore actively engaging with members to provide guidance and resources that will help them navigate these changes effectively through planned workshops and seminars to offer practical advice on managing wage increases and optimizing operational efficiency.

We also aim to facilitate discussions with government representatives to explore potential support measures that could ease the transition for businesses.

While the specifics of these support mechanisms are still being developed, there is a clear commitment to working through expected challenges.

Employers are encouraged to stay informed about these developments and to engage with both government and industry representatives to access available resources.

Collaboration and shared commitment will be key to navigating this transition smoothly and effectively.

By championing fair wages and equitable treatment, we not only enhance the well being of our workforce but also contribute significantly to Fiji’s ongoing economic progress and are hopeful that discussions on productivity will commence soon.

Together, we can ensure that this wage increase translates into tangible benefits for both workers and the nation, reinforcing our position as a leader in sustainable and inclusive economic development.
Fantasha Lockington – CEO, FHTA (Published in the Fiji Times on 1 August 2024)